A new Federal Reserve Bank of Cleveland working paper says cryptocurrency ownership is driven less by demographics or general risk appetite than by sharply different beliefs about future returns. The study argues that these expectations may help explain crypto’s persistent volatility and the way price rallies can draw in new buyers, creating a feedback loop in which rising prices reinforce bullish views and attract additional investors. According to Cointelegraph, researchers Michael Weber, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko used repeated surveys of as many as 25,000 US households per wave and found that expectations about crypto returns explained more of the variation in ownership than a broad set of demographic characteristics. The paper, titled “Do You Even Crypto, Bro? Cryptocurrencies in Household Finance,” also included a randomized information experiment showing that giving people information about Bitcoin’s (BTC) recent performance increased both desired crypto allocation and later purchases. The authors said the findings point to a possible mechanism behind speculative bubbles, where past gains attract new investors, their buying pushes prices higher, and still more buyers are drawn in. They wrote that positive returns attract new participants, which raises the price further. The researchers also noted that cryptocurrency remains poorly understood by many households. In their 2021 survey, 87% of non-owners said they did not know what return to expect over the following year, while 54% of owners said the same. Among those willing to make a forecast, crypto owners expected an average 22% return over the following year, compared with 7% among non-owners. Owners also tended to view crypto as less risky. The study found that a one-percentage-point increase in expected crypto return was associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency, and that expectations about returns and risk explained more variation in ownership than age, income and gender. The demographic profile of crypto investors still stood out, with people under 40 more likely to own crypto than those over 60, men more likely than women, and higher-income and wealthier households also more likely to participate. In 2025, the researchers randomly assigned households to receive information about BTC, stocks, GameStop or inflation. Those shown Bitcoin’s previous 12-month return increased their desired crypto allocation by about 2 percentage points and later crypto purchases by about 2.5 percentage points. The effect was strongest among people who said they lacked enough information, while those who already believed crypto was a bad investment generally did not respond. The paper also found that crypto wealth can affect household consumption, with a doubling in BTC’s price making a household whose entire financial portfolio was in crypto more likely to buy a durable good, though the effect did not continue into ordinary spending. The authors said crypto gains appear to be treated more like gambling income or lottery winnings than a lasting increase in wealth.